Economics 201A: Economic Theory
Economics 201A: Economic Theory (first half )
Tu-Th 12:30–2:00
150 GSPP
1
Description
Economics 201A is the first semester of the required microeconomic theory sequence for first-year
Ph.D. students in the economics department. The first half of the fall semester focuses on choice theory, consumer theory, and social choice. The second half will be taught by Chris Shannon and will cover general equilibrium. (A separate syllabus will be distributed for the second half.) In the spring, the first half of 201B will cover game theory and the second half will cover information economics. The last lecture of this half will be on Thursday October 9; the general equilibrium material begins on Tuesday October 14.
This course prepares students …show more content…
to conduct original research in economics. While qualified students from other departments are welcome to enroll, this course is not designed to teach microeconomic principles for application in other disciplines. In fact, students are assumed to have an understanding of demand, supply, partial equilibrium, monopoly pricing, and so on at an advanced undergraduate level.
2
Prerequisites and enrollment
Students are assumed to have knowledge of intermediate microeconomics, multivariate calculus, and linear algebra. The formal prerequisite for enrollment in 201A is Economics 204, where a passing grade is a B- or higher. A good grade in an advanced undergraduate course in real analysis, e.g. Mathematics 104, can be substituted for Economics 204 at the discretion of Professor Haluk Ergin. There are absolutely and categorically no exceptions to the prerequisite. Anyone who received an unsatisfactory grade in 204 cannot enroll.
If you are using Mathematics 104 taken at UC Berkeley to satisfy the prerequisite, please e-mail me a PDF copy of your unofficial transcript. If you hope to use coursework from another institution to satisfy the waiver and have a question about whether you can waive Economics 204 with your prior coursework, please contact Professor Ergin [hie[at]econ.berkeley.edu]; attach your transcript and the syllabus from the real analysis course as PDF files in your e-mail. If you received a waiver from Professor Ergin, forward that email to me.
Berkeley undergraduates who wish to enroll must have taken received a grade of A– or better in Mathematics 104 (Real Analysis), and have a professor in the economics department send me a short letter supporting their enrollment in 201A. Students visiting from other institutions must satisfy the prerequisite.
Keep in mind that if you are taking this course in the hope of applying to Ph.D. programs in economics, receiving less than a straight A will probably hurt your chances of being admitted to
1
the most competitive programs, i.e., receiving an A– might hurt your application. A majority of students who take Economics 201A before applying to graduate school receive a grade worse than an A in the course. Poor performance is not a valid reason to drop the class later in the semester. Once I verify the prerequisites, I will pass your name on to Vicky Lee, who will provide a course enrollment code. You will not be processed from the waitlist until the prerequisites have been verified and your name is forwarded to Ms. Lee. I do not have course approval codes.
The enrollment is cross-verified with the prerequisites at several points in the semester. Anyone who is enrolled in the course without having satisfied the prerequisite, including anyone who is enrolled after receiving an unsatisfactory grade in Economics 204, will receive an F grade, regardless of her performance in the course.
All students must register to receive a letter grade in the class. The class cannot be audited or taken on a credit/no-credit basis. Anyone who is registered on a credit/no-credit basis at the end of the semester will receive a no-credit grade.
The waitlist for usually takes at two weeks to be processed, please be patient in the meantime.
3
Instructors and office hours
• David Ahn. Office hours: Tuesday and Thursday 2:00–3:00 509 Evans; e-mail: dahn[at]econ
• Avner Shlain. Office hours: Monday 4:00–6:00 650 Evans; e-mail: shlain[at]econ
• Mauricio Ulate. Office hours: Thursday 2:00–4:00 636 Evans; e-mail: mauricioulate[at]econ
If you plan on visiting my office hours, please send me an e-mail the day before. I am also happy
to answer short questions over e-mail. For basic questions regarding the course material (e.g., help with understanding a step of a proof, questions about the solution of a problem, a review of Taylor expansion or other mathematical basics) please e-mail or visit Avner or Maurizio.
Students may attend any of the four sections.
4
Grading
The grade for the first half of the course is determined by a two-hour midterm on Monday October
13 6:00–8:00. The numerical grades from the first and second halves are weighted equally. In particular, the final grade is an average of z-scores for each half, recalling that the z-score is
Xi − E[X]
,
Std[X] where Xi is student i’s score, E[X] is the mean score in the class, and Std[X] is the standard deviation of scores.
There is no adjustment for improvement. The median grade for 201A is typically a B+. In principle, everyone in the course can pass. Each time I have taught this course
2
at least two students have failed, and typically five to seven receive a grade of B– or worse. At most one student receives an A+.
The midterm is closed book and closed note, but any definition or result required to finish a problem will be provided on the exam. Students requiring special accommodations for the midterm should immediately notify me. No such requests will be considered after September 12. Midterm scores will only be reconsidered for clerical or accounting errors, e.g., a miscalculation of the total.
Weekly problem sets will be assigned. Each problem set reviews material from prior lectures and previews upcoming material for future lectures. Problem sets are due at the beginning of class; late problem sets will not be accepted. After two problem sets are collected, a coin will be flipped to decide which of the two is graded. While problem set grades are not an explicit component of the grade, keeping up with the problem sets is the best way to learn the material and to …show more content…
prepare for the midterm. Moreover, in cases where the midterm grade is on the border between two letter grades, problem set grades will be used to determine the final letter grade.
All students are accountable to the Academic Honor Code.
I encourage students to discuss problems collaboratively, but final solutions must be produced independently. Anyone caught cheating on an exam in this course will receive a failing grade in the course and will also be reported to the University Center for Student Conduct. In order to guarantee that you are not suspected of cheating, please keep your eyes on your own materials and do not converse with others during the exams.
No electronic devices, including cell phones, computers, and tablets, may be used during lectures. These devices distract other students. Using an electronic device in class will result in a one-point deduction from the midterm exam grade.
The final exam for the course will be on Thursday December 11 9:00–12:00. The final exam will cover only material from the second half of the course. Please note the date now. The final exam will not be rescheduled for any reason other than official university accommodation of religious creed.
Students should not enroll in the course if they have conflicts with the exam dates and times other than those covered by the official university policies on religious creed. Students requiring
such accommodation must notify Chris Shannon (e-mail: cshannon[at]econ.berkeley.edu) during the first two weeks of the semester.
5
Website
The course website is hosted on the Berkeley bCourses system: https://bcourses.berkeley.edu/courses/1267579 Course notes, problem sets, solutions, and class announcements will be posted there. The website is not publicly available. If you are not yet enrolled, please contact one of the GSI’s with your email address so you can be added to the participant list and access the website.
3
6
Course materials and textbooks
The course material will mainly draw from the course notes. The notes almost certainly contain errors and typos, please bring these to my attention as you notice them. You are expected to have read the relevant course notes, at a desk with paper and pencil, before each class.
You are especially urged to attempt the exercises as you read the notes. Since this prior reading will be assumed, the lectures will be essentially incomprehensible to anyone who has not done the required reading beforehand.
No books are required, but the following books are recommended:
• D. M. Kreps, Notes on the Theory of Choice, Westview Press, 1988
• A. Mas-Colell, M. D. Whinston, and J. Green, Microeconomic Theory, Oxford University
Press, 1995
• A. Rubinstein, Lecture Notes in Microeconomic Theory, Princeton University Press, 2006
The course structure most closely follows Professor Rubinstein’s book, which is also available freely online at: http://arielrubinstein.tau.ac.il/Rubinstein2005.pdf. Corrections to the text are also online at: http://arielrubinstein.tau.ac.il/Corrections.pdf.
7
Outline for first half
1. Preference, choice, and utility [3 lectures]
Kreps §2–3; MWG §1,2.F,3.B,3.C; Rubinstein §1–3
Preference relations, Choice rules, Rationalizable choice, Revealed preference, Houthakker’s
Axiom, Sen’s α and β, Application: consumer choice, Utility functions, Continuity of preference, Debreu’s Theorem, Structural properties of utility, Quasi-linear utility
2. Consumer behavior and demand [4 lectures]
MWG §2–4; Rubinstein §4–6
Walrasian demand, Berge’s Theorem, Continuity of demand, Implicit Function Theorem, Differentiability of demand, Smooth comparative statics, Monotone comparative statics, Hicksian demand, Duality, Slutsky matrix, Generalized Axiom of Revealed Preference, Afriat’s
Theorem
3. Production and supply [2 lectures]
MWG §5; Rubinstein §7
Production sets, Properties of supply, Aggregate and centralized supply, Separating Hyperplane Theorem, First and Second Welfare Theorems of supply
4
4. Choice under uncertainty [4 lectures]
Kreps §4–9,14; MWG §6; Rubinstein §8,9)
Independence, Archimedean axiom, Mixture Space Theorem, von Neumann–Morgenstern Expected Utility Theorem, Application: Becker–DeGroot–Marschak mechanisms and preference reversals, State-Independence, Monotonicity, Subjective probability, Anscombe–Aumann Expected Utility Theorem, Absolute and comparative risk aversion, Arrow–Pratt measure of risk aversion
5. Social choice and welfare [1 lecture]
MWG §21,22; Rubinstein §10
Social welfare functionals, Paretian axiom, Independence of Irrelevant Alternatives, Arrow’s
Possibility Theorem, Decisive coalitions
8
Frequently asked questions
Q: I received a C+ in Economics 204. I really understood the material and my course performance does not accurately reflect my understanding. I can do well in Economics 201A. Can I enroll in the course?
A: No. You have not satisfied the prerequisite. Consider taking Mathematics 104 this year and enrolling in Economics 201A next academic year.
Q: Can I enroll in the course if I take Mathematics 104 this semester?
A: No. The prerequisite must be satisfied before the course begins.
Q: Is Economics 201A a prerequisite for Economics 201B?
A: Yes. Any student who is not enrolled in 201A cannot take 201B.
Q: My grade in the second half was much better than my grade in the first half. Can the second half be weighted more heavily in my case to reflect my improvement over the semester?
A: No. Both halves are weighted equally without exceptions.
Q: My program requires a B grade to continue my studies, and I received a B–. Is there any way to change the grade to a B?
A: No. Any concern regarding how your grade impacts your progress is between you and your graduate program. The economics department cannot adjust grading standards to accommodate other programs.
5
Tu-Th 12:30–2:00
150 GSPP
1
Description
Economics 201A is the first semester of the required microeconomic theory sequence for first-year
Ph.D. students in the economics department. The first half of the fall semester focuses on choice theory, consumer theory, and social choice. The second half will be taught by Chris Shannon and will cover general equilibrium. (A separate syllabus will be distributed for the second half.) In the spring, the first half of 201B will cover game theory and the second half will cover information economics. The last lecture of this half will be on Thursday October 9; the general equilibrium material begins on Tuesday October 14.
This course prepares students …show more content…
to conduct original research in economics. While qualified students from other departments are welcome to enroll, this course is not designed to teach microeconomic principles for application in other disciplines. In fact, students are assumed to have an understanding of demand, supply, partial equilibrium, monopoly pricing, and so on at an advanced undergraduate level.
2
Prerequisites and enrollment
Students are assumed to have knowledge of intermediate microeconomics, multivariate calculus, and linear algebra. The formal prerequisite for enrollment in 201A is Economics 204, where a passing grade is a B- or higher. A good grade in an advanced undergraduate course in real analysis, e.g. Mathematics 104, can be substituted for Economics 204 at the discretion of Professor Haluk Ergin. There are absolutely and categorically no exceptions to the prerequisite. Anyone who received an unsatisfactory grade in 204 cannot enroll.
If you are using Mathematics 104 taken at UC Berkeley to satisfy the prerequisite, please e-mail me a PDF copy of your unofficial transcript. If you hope to use coursework from another institution to satisfy the waiver and have a question about whether you can waive Economics 204 with your prior coursework, please contact Professor Ergin [hie[at]econ.berkeley.edu]; attach your transcript and the syllabus from the real analysis course as PDF files in your e-mail. If you received a waiver from Professor Ergin, forward that email to me.
Berkeley undergraduates who wish to enroll must have taken received a grade of A– or better in Mathematics 104 (Real Analysis), and have a professor in the economics department send me a short letter supporting their enrollment in 201A. Students visiting from other institutions must satisfy the prerequisite.
Keep in mind that if you are taking this course in the hope of applying to Ph.D. programs in economics, receiving less than a straight A will probably hurt your chances of being admitted to
1
the most competitive programs, i.e., receiving an A– might hurt your application. A majority of students who take Economics 201A before applying to graduate school receive a grade worse than an A in the course. Poor performance is not a valid reason to drop the class later in the semester. Once I verify the prerequisites, I will pass your name on to Vicky Lee, who will provide a course enrollment code. You will not be processed from the waitlist until the prerequisites have been verified and your name is forwarded to Ms. Lee. I do not have course approval codes.
The enrollment is cross-verified with the prerequisites at several points in the semester. Anyone who is enrolled in the course without having satisfied the prerequisite, including anyone who is enrolled after receiving an unsatisfactory grade in Economics 204, will receive an F grade, regardless of her performance in the course.
All students must register to receive a letter grade in the class. The class cannot be audited or taken on a credit/no-credit basis. Anyone who is registered on a credit/no-credit basis at the end of the semester will receive a no-credit grade.
The waitlist for usually takes at two weeks to be processed, please be patient in the meantime.
3
Instructors and office hours
• David Ahn. Office hours: Tuesday and Thursday 2:00–3:00 509 Evans; e-mail: dahn[at]econ
• Avner Shlain. Office hours: Monday 4:00–6:00 650 Evans; e-mail: shlain[at]econ
• Mauricio Ulate. Office hours: Thursday 2:00–4:00 636 Evans; e-mail: mauricioulate[at]econ
If you plan on visiting my office hours, please send me an e-mail the day before. I am also happy
to answer short questions over e-mail. For basic questions regarding the course material (e.g., help with understanding a step of a proof, questions about the solution of a problem, a review of Taylor expansion or other mathematical basics) please e-mail or visit Avner or Maurizio.
Students may attend any of the four sections.
4
Grading
The grade for the first half of the course is determined by a two-hour midterm on Monday October
13 6:00–8:00. The numerical grades from the first and second halves are weighted equally. In particular, the final grade is an average of z-scores for each half, recalling that the z-score is
Xi − E[X]
,
Std[X] where Xi is student i’s score, E[X] is the mean score in the class, and Std[X] is the standard deviation of scores.
There is no adjustment for improvement. The median grade for 201A is typically a B+. In principle, everyone in the course can pass. Each time I have taught this course
2
at least two students have failed, and typically five to seven receive a grade of B– or worse. At most one student receives an A+.
The midterm is closed book and closed note, but any definition or result required to finish a problem will be provided on the exam. Students requiring special accommodations for the midterm should immediately notify me. No such requests will be considered after September 12. Midterm scores will only be reconsidered for clerical or accounting errors, e.g., a miscalculation of the total.
Weekly problem sets will be assigned. Each problem set reviews material from prior lectures and previews upcoming material for future lectures. Problem sets are due at the beginning of class; late problem sets will not be accepted. After two problem sets are collected, a coin will be flipped to decide which of the two is graded. While problem set grades are not an explicit component of the grade, keeping up with the problem sets is the best way to learn the material and to …show more content…
prepare for the midterm. Moreover, in cases where the midterm grade is on the border between two letter grades, problem set grades will be used to determine the final letter grade.
All students are accountable to the Academic Honor Code.
I encourage students to discuss problems collaboratively, but final solutions must be produced independently. Anyone caught cheating on an exam in this course will receive a failing grade in the course and will also be reported to the University Center for Student Conduct. In order to guarantee that you are not suspected of cheating, please keep your eyes on your own materials and do not converse with others during the exams.
No electronic devices, including cell phones, computers, and tablets, may be used during lectures. These devices distract other students. Using an electronic device in class will result in a one-point deduction from the midterm exam grade.
The final exam for the course will be on Thursday December 11 9:00–12:00. The final exam will cover only material from the second half of the course. Please note the date now. The final exam will not be rescheduled for any reason other than official university accommodation of religious creed.
Students should not enroll in the course if they have conflicts with the exam dates and times other than those covered by the official university policies on religious creed. Students requiring
such accommodation must notify Chris Shannon (e-mail: cshannon[at]econ.berkeley.edu) during the first two weeks of the semester.
5
Website
The course website is hosted on the Berkeley bCourses system: https://bcourses.berkeley.edu/courses/1267579 Course notes, problem sets, solutions, and class announcements will be posted there. The website is not publicly available. If you are not yet enrolled, please contact one of the GSI’s with your email address so you can be added to the participant list and access the website.
3
6
Course materials and textbooks
The course material will mainly draw from the course notes. The notes almost certainly contain errors and typos, please bring these to my attention as you notice them. You are expected to have read the relevant course notes, at a desk with paper and pencil, before each class.
You are especially urged to attempt the exercises as you read the notes. Since this prior reading will be assumed, the lectures will be essentially incomprehensible to anyone who has not done the required reading beforehand.
No books are required, but the following books are recommended:
• D. M. Kreps, Notes on the Theory of Choice, Westview Press, 1988
• A. Mas-Colell, M. D. Whinston, and J. Green, Microeconomic Theory, Oxford University
Press, 1995
• A. Rubinstein, Lecture Notes in Microeconomic Theory, Princeton University Press, 2006
The course structure most closely follows Professor Rubinstein’s book, which is also available freely online at: http://arielrubinstein.tau.ac.il/Rubinstein2005.pdf. Corrections to the text are also online at: http://arielrubinstein.tau.ac.il/Corrections.pdf.
7
Outline for first half
1. Preference, choice, and utility [3 lectures]
Kreps §2–3; MWG §1,2.F,3.B,3.C; Rubinstein §1–3
Preference relations, Choice rules, Rationalizable choice, Revealed preference, Houthakker’s
Axiom, Sen’s α and β, Application: consumer choice, Utility functions, Continuity of preference, Debreu’s Theorem, Structural properties of utility, Quasi-linear utility
2. Consumer behavior and demand [4 lectures]
MWG §2–4; Rubinstein §4–6
Walrasian demand, Berge’s Theorem, Continuity of demand, Implicit Function Theorem, Differentiability of demand, Smooth comparative statics, Monotone comparative statics, Hicksian demand, Duality, Slutsky matrix, Generalized Axiom of Revealed Preference, Afriat’s
Theorem
3. Production and supply [2 lectures]
MWG §5; Rubinstein §7
Production sets, Properties of supply, Aggregate and centralized supply, Separating Hyperplane Theorem, First and Second Welfare Theorems of supply
4
4. Choice under uncertainty [4 lectures]
Kreps §4–9,14; MWG §6; Rubinstein §8,9)
Independence, Archimedean axiom, Mixture Space Theorem, von Neumann–Morgenstern Expected Utility Theorem, Application: Becker–DeGroot–Marschak mechanisms and preference reversals, State-Independence, Monotonicity, Subjective probability, Anscombe–Aumann Expected Utility Theorem, Absolute and comparative risk aversion, Arrow–Pratt measure of risk aversion
5. Social choice and welfare [1 lecture]
MWG §21,22; Rubinstein §10
Social welfare functionals, Paretian axiom, Independence of Irrelevant Alternatives, Arrow’s
Possibility Theorem, Decisive coalitions
8
Frequently asked questions
Q: I received a C+ in Economics 204. I really understood the material and my course performance does not accurately reflect my understanding. I can do well in Economics 201A. Can I enroll in the course?
A: No. You have not satisfied the prerequisite. Consider taking Mathematics 104 this year and enrolling in Economics 201A next academic year.
Q: Can I enroll in the course if I take Mathematics 104 this semester?
A: No. The prerequisite must be satisfied before the course begins.
Q: Is Economics 201A a prerequisite for Economics 201B?
A: Yes. Any student who is not enrolled in 201A cannot take 201B.
Q: My grade in the second half was much better than my grade in the first half. Can the second half be weighted more heavily in my case to reflect my improvement over the semester?
A: No. Both halves are weighted equally without exceptions.
Q: My program requires a B grade to continue my studies, and I received a B–. Is there any way to change the grade to a B?
A: No. Any concern regarding how your grade impacts your progress is between you and your graduate program. The economics department cannot adjust grading standards to accommodate other programs.
5